Summation
Land value plus depreciated cost of improvements — the cost approach for buildings without active markets.
Methodology
The summation method (also called the cost approach) values a property by adding the market value of the land to the depreciated replacement cost of the improvements. It is the principal method for special-purpose buildings such as schools, hospitals, places of worship and infrastructure assets where there is no active sales market.
The Insitive module derives the land rate from comparable land sales (or your nominated rate), takes the build rate from a published cost guide or your in-house API, and applies a straight-line or curvilinear depreciation curve based on the building’s age and economic life.
When to use it
- Special-use properties: schools, hospitals, places of worship, sporting facilities.
- New or near-new buildings where market evidence is thin.
- Insurance valuations and replacement-cost reporting.
Standards & references
- IVS 105 — Valuation Approaches and Methods (Cost Approach), IVS 2025.
- IVS 104 — Bases of Value.
- API Professional Practice 2021 — Australian Property Institute (adopts IVS).
- AASB 13 — Fair Value Measurement (Level 3 inputs for special-purpose / not-for-profit assets).
Plugin interface
Every method is a self-contained module that plugs into the Valuation App. It exposes a typed input/output schema so it can be invoked from a report writer, a workflow, or your own backend.
- land : { area, rate }Site area in m² and the land rate in $/m².
- improvements : { area, rate, age, econLife }Improvements details for depreciation.
- siteWorks : MoneyHard-cost site works.
- softCosts : RatioSoft costs as a fraction of hard costs.
- indicatedValue : MoneyTotal indicated value via summation.
- depreciation : RatioApplied depreciation factor.
- breakdown : CostBreakdownItemised cost components for report writer.